Centre asks MSMEs to shed subsidy-driven mindset

The Centre has asked the Micro, Small and Medium Enterprises (MSME) to move away from subsidy-driven and government-dependent mindset and instead harp on innovation and sustainable business model for growth.

“The government-dependent and subsidy mindset has to go as it has not worked too well for the sector,” Union Ministry of MSME Secretary Uday Kumar Varma said addressing India SME Conclave 2010 at the Indian Institute of Management (IIM), Lucknow here.

Speaking on the topic of ‘Managing MSME Business for sustainable enhanced growth’, he suggested the sector should consider ownership of the MSME Cluster Development Programmes run by the Centre.

“The government wants the ownership of these clusters to rest with industry and wants the community to create useful infrastructure in partnership,” he said. The conclave was organised in association with Indian Industries Association (IIA).

MSME sector accounts for 45 per cent of India’s manufacturing, 40 per cent of exports, 17 per cent of the Gross Domestic Product (GDP), provides employment to 60 million people and has a product range of 8,000. There are estimated 26 million MSMEs in India.

Varma lamented policymakers’ lacking historical data and statistics about credit appetite of MSMEs. “We are largely clueless as to the likely demand or estimate of credit in MSMEs, which is a disabling factor to evaluate progress,” he said.

The estimated outstanding credit to MSMEs is Rs 3,00,000 crore and there had been a 20 per cent annual growth to it.

“Now, we have MIS (Management Information System) in place that would in another two years show the actual credit flow to MSMEs,” Varma informed.

He further said 50 to 55 Indian companies got almost 90 per cent of the media space in the country, while the MSME sector could hardly garner one to two per cent of the same.

“This calls for more unity and professionalism among the MSMEs. They should join hands and unite under one platform nationally, so that their voice is heard much better and they have better negotiating power,” he suggested.